FDIC Federal Register Citations

September 10, 2004

Robert E. Feldman, Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, N.W.
Washington, DC 20429

Re: RIN 3064-AC50 Community Reinvestment

Dear Mr. Feldman:

Thank you for the opportunity to comment on proposed changes to the Community Reinvestment Act, (CRA). We were recently examined for CRA compliance as a small bank and received a satisfactory rating using the small bank streamlined method. In January of 2005, if no changes are made to the definition of small bank, we will be required to perform under the large bank standards since this will be the second year that our asset size exceeded $250 million at year-end.

The Peoples Bank Co. is located in a rural area, composed of agriculture and some small businesses. None of our assessment area is located within an MSA. We have six offices and several ATMs located throughout our assessment area.

Your proposal to raise the small bank asset size to $1 billion will be helpful, but I question the need to incorporate a community development criterion for banks with assets between $250 million and $1 billion. Our assessment area has no more than two businesses that employ over 500 persons and most farms and businesses would fall below $1 million in gross annual revenue. A bank our size ($258,891,605 as of 12/31/03) in a rural community must serve the needs of the farmers and small business owners as well as its consumers or it would not continue to grow and prosper, Qualified community development investments are non-existent in our assessment area and few community development services are available. Other than the lending qualification, we will be hard pressed to meet the other criteria and keep our investment dollars within our assessment area. Requiring a bank our size to search out such programs would not be in the best interest of the families, farmers and businesses located in our area.

The purpose of CRA is to ensure institutions meet the credit needs of the communities they serve. As a community bank we would not survive if we did not offer credit products and services to meet the needs of the consumers, farmers and businesses located in our assessment area. As an example, when our small businesses and farmers have a tough year because of economic conditions or weather we work with them to help them survive until they have an opportunity to turn things around. That is often contrary to the suggestions from our regulators and how a larger holding company bank is able to treat its customers.

Our management continues to support raising the small bank definition to banks of $500 million or less In 1995, 10.6% of FDIC supervised banks were classified as large banks (assets in excess of $250 million) and held 66.7% of the assets. Increasing the small bank definition to $500 million would change the 2004 large bank percentage to 9.3% (difference of 1.3%) and asset holdings to 67.9% (difference of 1.2%) which is comparable and a much smaller spread than increasing the definition to $1 billion. For this reason, it is our opinion that the additional community development criterion should not be required for banks until their assets exceed the $500 million level.

Sincerely,
Margaret C. Griesdorn Vice President and
CRA Officer
The Peoples Bank Co.
Coldwater, OH